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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 30, 1996
THE PRICE REIT, INC.
(Exact Name of Registrant as Specified in its Charter)
Maryland 1-13432 52-1746059
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
7979 Ivanhoe Avenue
La Jolla, California 92037
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (619) 551-2320
None
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On August 15, 1995 The Price REIT, Inc. (the "Company") filed a
registration statement (File No. 33-95832) on Form S-3 with the Securities and
Exchange Commission (the "Commission") relating to the public offering,
pursuant to Rule 415 under the Securities Act of 1933, as amended (the
"Securities Act"), of up to an aggregate of $175,000,000 in securities (the
"Securities") of the Company (the "Registration Statement"). On September 1,
1995, the Commission declared the Registration Statement, as amended by
Post-Effective Amendment No. 1, effective. (The Registration Statement, the
462(b) Registration Statement (as defined below) and definitive prospectus
contained therein are collectively referred to as the "Prospectus.")
On October 30, 1996, the Company filed a registration statement (File
No. 333-15143) on Form S-3 with the Commission pursuant to Rule 462(b) under
the Securities Act, registering up to an additional $10,566,750 of Securities
(the "462(b) Registration Statement").
The Company filed on November 4, 1996 a Prospectus Supplement, dated
November 4, 1996, relating to the issuance and sale of up to $55,000,000
principal amount of 7 1/2% Senior Notes due 2006 (the "Prospectus Supplement"),
with the Commission. In connection with the filing of the Prospectus Supplement
with the Commission, the Company is filing certain exhibits as part of this Form
8-K. See "Item 7. Financial Statements and Exhibits."
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following exhibits are filed with this report on Form 8-K:
EXHIBIT NO. DESCRIPTION
- ---------- -----------
1.1 Purchase Agreement among the Company, Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan &
Co. and J.P. Morgan Securities Inc. dated October 31, 1996, with
respect to the issuance and sale by the Company of up to
$55,000,000 of 7 1/2% Senior Notes due 2006.
4.1 Form of certificate for the Senior Notes.
4.2 Officers' Certificate of the Company regarding the Senior Notes.
5.1 Opinion of Ballard Spahr Andrews & Ingersoll regarding
the validity of the Senior Notes.
5.2 Opinion of Gibson, Dunn & Crutcher LLP regarding
the Senior Notes.
8.1 Opinion of Gibson, Dunn & Crutcher LLP regarding
certain tax matters.
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23.1 Consent of Ballard Spahr Andrews & Ingersoll (included as part
of Exhibit 5.1).
23.2 Consent of Gibson, Dunn & Crutcher LLP (included as part of
Exhibits 5.2 and 8.1).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE PRICE REIT, INC.
Date: November 4, 1996 By:____________________________
George M. Jezek
Chief Financial Officer
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EXHIBIT 1.1
$55,000,000
THE PRICE REIT, INC.
(a Maryland corporation)
7-1/2% Senior Notes Due 2006
PURCHASE AGREEMENT
October 31, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
J.P. MORGAN & CO.
J.P. Morgan Securities Inc.
c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters - North Tower
250 Vesey Street
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
The Price REIT, Inc., a Maryland corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch"), and J.P. Morgan & Co., J.P. Morgan
Securities Inc. ("J.P. Morgan," and together with Merrill Lynch, the
"Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), with respect to the issue and sale
by the Company and the purchase by the Underwriters, acting severally and not
jointly, of the respective principal amounts set forth in Schedule A hereto of
$55,000,000 aggregate principal amount of the Company's 7-1/2% Senior Notes
Due 2006 (the "Securities"). The Securities are to be issued pursuant to an
indenture, dated as of October 27, 1995 (the "Indenture"), between the Company
and First Trust of California, National Association, as trustee (the
"Trustee"). The term "Indenture," as used herein, includes the Officer's
Certificate (as defined in the Indenture) establishing the form and terms of
the Securities pursuant to Section 3.01 of the Indenture.
The Company understands that the Underwriters propose to make
a public offering of the Securities as soon as they deem advisable after this
Agreement has been executed and delivered.
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A registration statement on Form S-3 (No. 33-95832), and
pre-effective amendment No. 1 thereto, with respect to the Securities has (i)
been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act" or the "1933 Act"),
and the rules and regulations (the "Rules and Regulations" or the "1933 Act
Regulations") of the Securities and Exchange Commission (the "Commission")
promulgated thereunder for the offering from time to time of the Company's
equity and debt securities, including the Securities, in accordance with Rule
415 of the Rules and Regulations (the "Shelf Securities"), (ii) been filed with
the Commission under the Securities Act and (iii) become effective under the
Securities Act. Copies of such registration statement and Amendment No. 1
thereto have been delivered by the Company to the Underwriters. The Indenture
has been qualified under the Trust Indenture Act of 1939, as amended (the "1939
Act"). Such registration statement, as amended through the date of this
Agreement, is, on the one hand, and the prospectus constituting a part thereof
and each prospectus supplement relating to the offering of Securities to the
Underwriters for use (whether or not such prospectus supplement is required to
be filed by the Company pursuant to Rule 424(b) of the Rules and Regulations)
(the "Prospectus Supplement"), on the other hand, including all documents
incorporated therein by reference, as from time to time amended or supplemented
pursuant to the Securities Act, the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act" or the "1934 Act"), or otherwise, are
referred to herein as the "Registration Statement" and the "Prospectus,"
respectively; provided, however, that the Prospectus Supplement shall be
deemed to have supplemented the Prospectus only with respect to the offering of
Shelf Securities to which it relates; and provided further, that if any revised
prospectus shall be provided to the Underwriters by the Company for use in
connection with the offering of the Securities which differs from the
prospectus on file (whether or not such revised prospectus is required to be
filed by the company pursuant to Rule 424(b) of the 1933 Act Regulations), the
term "Prospectus" shall refer to such revised prospectus from and after the
time it is first provided to the Underwriters for such use. Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. For purposes of this Agreement, all references to the Registration
Statement, the Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR").
All references in this Agreement to financial statements and
schedules and other information which is "described," "disclosed," "contained,"
"included" or "stated" in the Registration Statement or the Prospectus (and all
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement or the Prospectus shall
be deemed to mean and include the filing of any document under the 1934 Act,
which is or is deemed to be incorporated by reference in the Registration
Statement or the Prospectus, as the case may be.
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If the Company elects to rely on Rule 434 under the 1933 Act Regulations, all
references to the Prospectus shall be deemed to include, without limitation,
the form of prospectus and the term sheet (the "Term Sheet"), taken together,
provided to the Underwriters by the Company in reliance on Rule 434 under the
1933 Act (the "Rule 434 Prospectus").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The
Company represents and warrants to each Underwriter as of the date hereof and
as of the Closing Time referred to in Section 2(b) hereof, and agrees with each
Underwriter, as follows:
(i) At the respective times the Registration
Statement, any Rule 462(b) Registration Statement and any
post- effective amendments thereto became effective, and at
the Closing Time, the Registration Statement, the Rule 462(b)
Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations
and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations"),
and did not and will not (taking into account any applicable
prospectus supplement) contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. Neither the Prospectus nor any amendments or
supplements thereto, at the time the Prospectus or any such
amendment or supplement was issued and at the Closing Time
included or will include an untrue statement of a material
fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading. The
representations and warranties in this subsection shall not
apply to statements in or omissions from the Registration
Statement or Prospectus or any amendments or supplements
thereto made in reliance upon and in conformity with
information contained in the last paragraph of the cover page
of the Prospectus Supplement, the first paragraph on the
inside cover page of the Prospectus Supplement and the third
paragraph under the heading "Underwriting" in the Prospectus
Supplement and furnished to the Company in writing by any
Underwriter through Merrill Lynch expressly for use in the
Registration Statement or Prospectus. The Prospectus filed as
part of the Registration Statement as originally filed or as
part of any amendment thereto, or filed pursuant to Rule 424
under the 1933 Act, complied when so filed in all material
respects with the 1933 Act Regulations and, if applicable, the
Prospectus delivered to the Underwriters for use in connection
with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T
promulgated by the Commission ("Regulation S-T").
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(ii) Each of the Registration Statement and any
Rule 462(b) Registration Statement has become effective under
the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration
Statement or, in each case, any part thereof has been issued
and no proceeding for that purpose has been instituted or is
pending or, to the knowledge of the Company, is contemplated
by the Commission or the state securities authority of any
jurisdiction and any request on the part of the Commission for
additional information has been complied with. No order
preventing or suspending the use of the Prospectus has been
issued and no proceeding for that purpose has been instituted
or is pending before or, to the knowledge of the Company, is
contemplated by, the Commission or the state securities
authority of any jurisdiction.
(iii) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act, the
Exchange Act or the 1939 Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading;
and any further documents so filed and incorporated by
reference in the Prospectus, when such documents become
effective or are filed with the Commission, as the case may
be, will conform in all material respects to the requirements
of the Securities Act, the Exchange Act or the 1939 Act, as
applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
(iv) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Maryland, is duly qualified to do
business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property
or the conduct of its business requires such qualification
(except where the failure to so qualify would not have a
material adverse effect on the consolidated financial
position, stockholders' equity, results of operations,
business affairs or business prospects of the Company), and
has all power and authority necessary to own or hold its
properties and to conduct the business in which it is engaged;
and the Company has no interest in any entity or person other
than (i) its ownership of all of the outstanding capital stock
of Price/Texas, Inc., a Texas corporation ("Price Texas"),
(ii) its ownership of all of the limited partnership interests
in Price/Baybrook, Ltd., a Texas limited partnership, and the
ownership by Price Texas of all of the general partnership
interests of Price/Baybrook, Ltd., (iii) its ownership of 100%
of the nonvoting preferred stock of K&F Development Company,
Inc., a California corporation (the "Development Company"),
(iv) its
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80% membership interest in Smithtown Venture Limited Liability
Company, a New York limited liability company, (v) its 50%
partnership interest in Centrepoint Associates, L.L.P., an
Arizona limited liability partnership, (vi) its 50% general
partnership interest in Hayden Plaza North Associates, an
Arizona general partnership, and (vii) the Development
Company's membership interest in Bridgewater Community Retail
Center, LLC, a New Jersey limited liability company
(collectively, the "Affiliates," and the Company's interests
in the Affiliates are referred to herein collectively as the
"Interests").
(v) Each of the Affiliates has been duly
organized and is validly existing as a corporation, limited
liability company or partnership, as the case may be, and in
good standing under the laws of its jurisdiction of
organization, is duly qualified to do business and is in good
standing as a foreign corporation, limited liability company
or partnership, as the case may be, in each jurisdiction in
which its respective ownership or lease of property or the
conduct of its business requires such qualification (except
where the failure to so qualify would not have a material
adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business affairs
or business prospects of the Company), and has all power and
authority necessary to own or hold its respective properties
and to conduct the business in which it is engaged; and none
of the Affiliates, other than Price/Baybrook, Ltd., is a
"significant subsidiary," as such term is defined in Rule 405
of the Rules and Regulations.
(vi) The Company has an authorized capitalization
as set forth in the Prospectus, and all of the issued shares
of capital stock of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and
conform to the description thereof contained in the
Prospectus; and the Company's Interests have been duly and
validly authorized and issued and are fully paid and
non-assessable and are owned by the Company free and clear of
all liens, encumbrances, equities or claims.
(vii) The Securities have been duly authorized and,
at the Closing Time, will have been duly executed by the
Company and, when authenticated in the manner provided for in
the Indenture and delivered against payment of the purchase
price therefor as provided herein, will constitute valid and
binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally or by general
equitable principles, and will be in the form contemplated by,
and entitled to the benefits of, the Indenture.
(viii) The Securities and the Indenture will conform
in all material respects to the respective statements relating
thereto contained in the Prospectus
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and will be in substantially the respective forms filed or
incorporated by reference, as the case may be, as exhibits to
the Registration Statement.
(ix) This Agreement has been duly authorized,
executed and delivered by the Company.
(x) The Indenture has been duly authorized by the
Company and has been duly qualified under the 1939 Act and,
when duly executed and delivered by the Company and the
Trustee, will constitute a valid and binding agreement of the
Company, enforceable against the Company in accordance with
its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization,
moratorium or similar laws relating to or affecting creditor's
rights generally or by general equitable principles.
(xi) The execution, delivery and performance of
this Agreement by the Company and the consummation of the
transactions contemplated hereby will not conflict with or
result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, partnership or joint
venture agreement or other agreement or instrument to which
the Company or any of the Affiliates is a party or by which
the Company or any of the Affiliates is bound or to which any
of the property or assets of the Company or any of the
Affiliates is subject, nor will such actions result in any
violation of the provisions of the charter or by-laws of the
Company or any governing document of any of the Affiliates or
any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Company or any of the Affiliates or any of their properties or
assets; and except for such consents, approvals,
authorizations, registrations or qualifications as have been
obtained or made, or as may be required under the Exchange Act
and applicable state securities laws in connection with the
purchase and distribution of the Securities by the
Underwriters, no consent, approval, authorization or order of,
or filing or registration with, any such court or governmental
agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby.
(xii) There are no contracts, agreements or
understandings between the Company and any person granting
such person the right to require the Company to file a
registration statement under the Securities Act with respect
to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in
the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to
any other registration statement filed by the Company under
the Securities Act.
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(xiii) Except as described in the Prospectus, the
Company has not sold or issued any debt securities during the
six- month period preceding the date of the Prospectus,
including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act.
(xiv) The Company has not sustained, since the date
of the latest audited financial statements included or
incorporated by reference in the Prospectus, any material loss
or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the
Prospectus; and, since such date, there has not been any
change in the capital stock or long-term debt of the Company
or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders'
equity or results of operations of the Company, otherwise than
as set forth or contemplated in the Prospectus.
(xv) The financial statements (including the
related notes and supporting schedules) filed as part of the
Registration Statement or included or incorporated by
reference in the Prospectus present fairly the financial
condition and results of operations of the entities purported
to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved.
(xvi) Ernst & Young LLP, who have certified certain
financial statements of the Company, whose report appears in
the Prospectus or is incorporated by reference therein and who
have delivered the initial letter referred to in Section 5(d)
hereof, are independent public accountants as required by the
Securities Act and the Rules and Regulations and were
independent accountants as required by the Securities Act and
the Rules and Regulations during the periods covered by the
financial statements on which they reported contained or
incorporated in the Prospectus.
(xvii) The Company and the Affiliates have good and
marketable title in fee simple to all real property and good
and marketable title to all personal property identified in
the Prospectus as being owned by them, in each case free and
clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as do not materially
affect the value of such property and do not materially
interfere with the use made and proposed to be made of such
property by the Company and the Affiliates; and all real
property and buildings held under lease by the Company and the
Affiliates are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not
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material and do not interfere with the use made and proposed
to be made of such property and buildings by the Company and
the Affiliates.
(xviii) The Company and the Affiliates carry, or are
covered by, insurance in such amounts and covering such risks
as is adequate for the conduct of their respective businesses
and the value of their respective properties and as is
customary for companies engaged in similar businesses in
similar industries.
(xix) There are no legal or governmental
proceedings pending to which the Company or any of the
Affiliates is a party or of which any property or assets of
the Company or any of the Affiliates is the subject which, if
determined adversely to the Company or any of the Affiliates,
might have a material adverse effect on the consolidated
financial position, stockholders' equity, results of
operations, business affairs or business prospects of the
Company and the Affiliates; and to the best of the Company's
knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others.
(xx) The conditions for use of Form S-3, as set
forth in the General Instructions thereto, have been satisfied.
(xxi) There are no contracts or other documents
which are required to be described in the Prospectus or filed
as exhibits to the Registration Statement by the Securities
Act or by the Rules and Regulations which have not been
described in the Prospectus or filed as exhibits to the
Registration Statement or incorporated therein by reference as
permitted by the Rules and Regulations.
(xxii) No relationship, direct or indirect, exists
between or among the Company on the one hand, and the
directors, officers, stockholders, customers or suppliers of
the Company on the other hand, which is required to be
described in the Prospectus which is not so described.
(xxiii) No labor disturbance by the employees of the
Company exists or, to the knowledge of the Company, is
imminent which might be expected to have a material adverse
effect on the consolidated financial position, stockholders'
equity, results of operations, business affairs or business
prospects of the Company.
(xxiv) Since the date as of which information is
given in the Prospectus, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued or
granted any security other than shares issued pursuant to
employee benefit plans, qualified stock options plans,
dividend reinvestment plans or other employee compensation
plans, (ii) incurred any liability or
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obligation, direct or contingent, other than liabilities and
obligations which were incurred in the ordinary course of
business, (iii) entered into any transaction not in the
ordinary course of business or (iv) declared or paid any
dividend on its capital stock not in the ordinary course of
business.
(xxv) Neither the Company nor any of the Affiliates
(i) is in violation of its charter, by-laws or other
organizational document, as applicable, (ii) is in default,
and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan
agreement, partnership or joint venture agreement or other
agreement or instrument to which it is a party or by which it
is bound or to which any of its properties or assets is
subject or (iii) is in violation of any law, ordinance,
governmental rule, regulation or court decree to which it or
its property or assets may be subject or has failed to obtain
any material license, permit, certificate, franchise or other
governmental authorization or permit necessary to the
ownership of its property or to the conduct of its business,
which default or violation might have a material adverse
effect on the consolidated financial position, stockholders'
equity, results of operations, business affairs or business
prospects of the Company.
(xxvi) There has been no storage, disposal,
generation, manufacture, refinement, transportation, handling
or treatment of toxic wastes, medical wastes, hazardous wastes
or hazardous substances by the Company or any of the
Affiliates (or, to the knowledge of the Company, any of their
predecessors in interest) at, upon or from any of the property
now or previously owned or leased by the Company or the
Affiliates in violation of any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit or which
would require remedial action under any applicable law,
ordinance, rule, regulation, order, judgment, decree or
permit, except for any violation or remedial action which
would not have, or could not be reasonably likely to have,
singularly or in the aggregate with all such violations and
remedial actions, a material adverse effect on the general
affairs, management, financial position, stockholders' equity
or results of operations of the Company; there has been no
material spill, discharge, leak, emission, injection, escape,
dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes,
medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of the
Affiliates or with respect to which the Company or any of the
Affiliates have knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or
release which would not have or would not be reasonably likely
to have, singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings
and releases, a material adverse effect on the general
affairs, management, financial position, stockholders' equity
or results
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of operations of the Company; and the terms "hazardous
wastes", "toxic wastes", "hazardous substances" and "medical
wastes" shall have the meanings specified in any applicable
local, state, federal and foreign laws or regulations with
respect to environmental protection.
(xxvii) Neither the Company nor any Affiliate is an
"investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations
of the Commission thereunder.
(xxviii) The Company has been and is
organized in conformity with the requirements for
qualification as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"), and
its method of operation has at all times enabled, and its
proposed method of operation will enable, the Company to meet
the requirements for taxation as a real estate investment
trust under the Code.
(xxix) At Closing Time, the Securities shall be
rated at least Baa3 by Moody's Investors Service Inc. and BBB-
by Standard & Poor's Corporation.
(b) Officer's Certificates. Any certificate signed by
any officer of the Company and delivered to the Underwriters or to counsel for
the Underwriters shall be deemed a representation and warranty by the Company
to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price set forth in Schedule B hereto (which is a part
hereof) the aggregate principal amount of Securities set forth in Schedule A
hereto opposite the name of such Underwriter, plus any additional principal
amount of Securities which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 10 hereof. The initial public offering
price, the purchase price to be paid by the Underwriters for the Securities,
and the interest rate on the Securities are set forth on Exhibit A hereto.
(b) Payment. Payment of the purchase price for, and
delivery of certificates for, the Securities shall be made at the offices of
Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los Angeles, California
90071; or at such other place as shall be agreed upon by the Underwriters and
the Company, at 8:00 a.m. (Los Angeles time), on the third (fourth, if the
pricing occurs after 4:30 p.m. Eastern Time on any given day) business day
after the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other
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time not later than seven business days after such date as shall be agreed upon
by the Underwriters and the Company (such time and date of payment and delivery
being herein called the "Closing Time").
Payment shall be made to the Company by wire transfer of
immediately available funds or similar same day funds payable to the order of
the Company against delivery to the Underwriters for the respective accounts of
the Underwriters of certificates for the Securities to be purchased by them.
Certificates for the Securities shall be in such denominations ($1,000 or
integral multiples thereof) and registered in such names as the Underwriters
may request in writing at least one full business day before the Closing Time.
It is understood that each Underwriter has authorized the other Underwriter,
for its account, to accept delivery of, receipt for, and make payment of the
purchase price for Securities which it has agreed to purchase. Merrill Lynch,
individually and not as representative of the Underwriters, may (but shall not
be obligated to) make payment of the purchase price for the Securities to be
purchased by any Underwriter whose check has not been received by the Closing
Time, but such payment shall not relieve such Underwriter from its obligations
hereunder. The certificates for the Securities will be made available for
examination and packaging by the Underwriters in the City of New York not later
than 10:00 a.m. (Eastern time) on the last business day prior to the Closing
Time.
SECTION 3. Covenants of the Company. The Company covenants
with each Underwriter as follows:
(a) Compliance with Securities Regulations and Commission
Requests. Subject to Section 3(b), the Company will notify the Underwriters
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement becomes effective, or any supplement to
the Prospectus or any amended Prospectus shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of any order preventing or suspending the use of
the Prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company will
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest
possible moment. If the Company elects to rely on Rule 434, the Company will
provide the Underwriters with copies of the form of Rule 434 Prospectus, in
such number as the Underwriters may reasonably request, and file or transmit
for filing with the Commission the form of Prospectus complying with Rule 434
of the 1933 Act in accordance with Rule 424(b)
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of the 1933 Act Regulations by the close of business in New York on the
business day immediately succeeding the date of this Agreement.
(b) Filing of Amendments. The Company will give the
Underwriters notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term Sheet
or any amendment, supplement or revision to either the prospectus included in
the Registration Statement at the time it became effective or to the
Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, will
furnish the Underwriters with copies of any such documents a reasonable amount
of time prior to such proposed filing or use, as the case may be, and will not
file any such documents to which the Underwriters or counsel for the
Underwriters shall reasonably object.
(c) Rule 434. If the Company uses Rule 434, it will
comply with the requirements of Rule 434.
(d) Delivery of Registration Statement. The Company will
deliver to each of the Underwriters and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to each of the Underwriters, without charge,
conformed copies of the Registration Statement as originally filed and of each
amendment thereto (excluding exhibits) for each of the Underwriters. The
copies of the Registration Statement and each amendment thereto furnished to
the Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(e) Delivery of Prospectuses. The Company has delivered
to each Underwriter, without charge, as many copies of the Prospectus as such
Underwriter reasonably requested, and the Company hereby consents to the use of
such copies for purposes permitted by the 1933 Act. The Company will furnish
to each Underwriter, without charge, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number of
copies of the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
(f) Continued Compliance with Securities Laws. The
Company will comply with the 1933 Act and the 1933 Act Regulations, the 1934
Act and the 1934 Act Regulations and the 1939 Act and the 1939 Act Regulations
so as to permit the completion of the distribution of the Securities as
contemplated in this Agreement and in the Prospectus. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with sales
of the Securities, any event shall occur or condition shall exist as a result
of which it is
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necessary, in the opinion of counsel for the Underwriters or for the Company,
to amend the Registration Statement or amend or supplement the Prospectus in
order that the Prospectus will not include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time
it is delivered to a purchaser, or if it shall be necessary, in the opinion of
such counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and file
with the Commission, subject to Section 3(b), such amendment or supplement as
may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and the
Company will furnish to the Underwriters such number of copies of such
amendment or supplement as the Underwriters may reasonably request.
(g) Blue Sky Qualifications. The Company will use its
best efforts, in cooperation with the Underwriters, to qualify the Securities
for offering and sale under the applicable securities laws of such states and
other jurisdictions of the United States as the Underwriters may designate;
provided, however, that the Company shall not be obligated to qualify as a
foreign corporation in any jurisdiction in which it is not so qualified, to
file any general consent to service of process or to subject itself to
taxation. In each jurisdiction in which the Securities have been so qualified,
the Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for a period
of not less than one year from the effective date of the Registration Statement
and any Rule 462(b) Registration Statement.
(h) Rule 158. The Company will make generally available
to its security holders as soon as practicable, but not later than 90 days
after the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations) covering
a twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the "effective date" (as defined in said Rule
158) of the Registration Statement.
(i) Use of Proceeds. The Company will use the net
proceeds received by it from the sale of the Securities in the manner specified
in the Prospectus under the heading "USE OF PROCEEDS."
(j) REIT Qualification. The Company has, since its
formation, operated in such a manner, and will continue to operate in such a
manner, as to qualify for taxation as a "real estate investment trust" under
the Code.
(k) Action by Company Regarding Price of Securities.
Except for the authorization of actions permitted to be taken by the
Underwriters as contemplated herein or in the Prospectus, the Company will not
(i) take, directly or indirectly, any action designed to cause or to result in,
or that might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the
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<PAGE> 14
Securities, (ii) sell, bid for or purchase the Securities or pay any person any
compensation for soliciting purchases of the Securities or (iii) pay or agree
to pay to any person any compensation for soliciting another to purchase any
other securities of the Company.
(l) Cuba Act. In accordance with the Cuba Act and
without limitation to the provisions of Sections 6 and 7 hereof, the Company
agrees to indemnify and hold harmless the Underwriters from and against any and
all loss, liability, claim, damage and expense whatsoever (including fees and
disbursements of counsel), as incurred, arising out of any violation by the
Company of the Cuba Act.
(m) Reporting Requirements. The Company, during the
period when the Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act and
the 1934 Act Regulations.
(n) Representations and Warranties. Prior to the Closing
Time, the Company and the Operating Partnership will notify the Underwriters in
writing immediately if (i) any event occurs that renders any of the
representations and warranties of the Company contained herein inaccurate or
incomplete in any material respect or (ii) with respect to the representations
and warranties of the Company contained herein that are limited to materiality
of the Company and the Affiliates considered as one enterprise, any matter or
event occurs that would render such representation or warranty inaccurate or
incomplete if given with respect to the Company or any Affiliate on an
individual basis.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident
to the performance of its obligations under this Agreement, including (i) the
printing (or reproduction) and filing of the Registration Statement as
originally filed and of each amendment thereto, (ii) the preparation, issuance
and delivery of the certificates for the Securities to the Underwriters,
including any transfer taxes or duties payable upon the sale of the Securities
to the Underwriters, (iii) the fees and other charges of the Company's counsel,
accountants and other advisors, (iv) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(g) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (v) the printing (or
reproduction) and delivery to the Underwriters of copies of the Registration
Statement as originally filed and of each amendment thereto and of the
Prospectus and any amendments or supplements thereto, (vi) the printing (or
reproduction) and delivery to the Underwriters of copies of the Blue Sky Survey,
(vii) the fees of the National Association of Securities Dealers, Inc. ("NASD"),
including the reasonable fees and other charges of counsel for the Underwriters
in connection with the NASD's review of the terms of the proposed public
offering of the Securities, and (viii) the fees and expenses of any transfer
agent or registrar for the Securities.
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<PAGE> 15
(b) Termination of Agreement. If this Agreement is
terminated by the Underwriters in accordance with the provisions of Section 5
or Section 9(a)(i) or Section 11 hereof, the Company shall reimburse the
Underwriters for all of their out-of-pocket expenses, including the reasonable
fees and other charges of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The
obligations of the Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company, delivered pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The
Registration Statement, including any Rule 462(b) Registration Statement, shall
have become effective, and at the Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters. The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) of the 1933 Act Regulations within the prescribed time
period, and prior to the Closing Time the Company shall have provided evidence
satisfactory to the Underwriters of such timely filing, or a post-effective
amendment providing such information shall have been promptly filed and
declared effective in accordance with the requirements of the 1933 Act
Regulations. If the Company has elected to rely upon Rule 434, a Term Sheet
shall have been filed with the Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At the Closing Time,
the Underwriters shall have received:
(i) The favorable opinion, dated as of the
Closing Time, of Gibson, Dunn & Crutcher LLP, counsel for the
Company, in form and substance reasonably satisfactory to
counsel for the Underwriters, to the effect that:
(A) The Company is duly qualified as a
foreign corporation to transact business and is in
good standing in the following states: Arizona,
California, Connecticut, Maryland, New York, Virginia
and Texas;
(B) The Affiliates are validly existing
and in good standing under the laws of their
respective jurisdictions of organization, and have
all power and authority necessary to own or hold
their respective properties and conduct the
businesses in which they are engaged; and to the
best of such counsel's knowledge, the Company owns
the non-voting preferred stock of the Development
Company free and clear of all liens, encumbrances,
equities or claims;
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(C) To the best of such counsel's
knowledge and other than as set forth in the
Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of
the Affiliates is a party or of which any property or
assets of the Company or any of the Affiliates is the
subject which, if determined adversely to the Company
or any of the Affiliates, might have a material
adverse effect on the consolidated financial
position, stockholders' equity, results of
operations, business affairs or business prospects of
the Company; and, to the best of such counsel's
knowledge, no such proceedings are threatened or
contemplated by governmental authorities or
threatened by others;
(D) The Indenture has been duly
qualified under the 1939 Act;
(E) The Indenture has been duly executed
and delivered by the Company and (assuming the due
authorization, execution and delivery thereof by the
Trustee) constitutes a valid and binding agreement of
the Company, enforceable against the Company in
accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is
subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding
in equity or at law).
(F) The Securities are in the form
contemplated by the Indenture and, assuming that the
Securities have been duly authenticated by the
Trustee in the manner described in its certificate
delivered to the Company at the Closing Time (which
fact such counsel need not determine by an inspection
of the Securities), the Securities have been duly
executed, issued and delivered by the Company and
constitute valid and binding obligations of the
Company, enforceable against the Company in
accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement
thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a
proceeding in equity or at law), and will be entitled
to the benefits of the Indenture.
(G) The Securities and the Indenture
conform in all material respects to the descriptions
thereof contained in the Prospectus.
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<PAGE> 17
(H) The Registration Statement was
declared effective under the Securities Act as of the
date and time specified in such opinion, the
Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) of the Rules and
Regulations specified in such opinion on the date
specified therein and no stop order suspending the
effectiveness of the Registration Statement has been
issued and, to the knowledge of such counsel, no
proceeding for that purpose is pending or threatened
by the Commission;
(I) The Registration Statement and the
Prospectus and any further amendments or supplements
thereto made by the Company prior to the Closing Time
(other than the financial statements and related
schedules and other financial and related statistical
data included therein or omitted therefrom, as to
which such counsel need express no opinion) comply as
to form in all material respects with the
requirements of the Securities Act and the Rules and
Regulations; and the documents incorporated by
reference in the Prospectus and any further amendment
or supplement to any such incorporated document made
by the Company prior to the Closing Time (other than
the financial statements and related schedules and
other financial and related statistical data included
or omitted therefrom, as to which such counsel need
express no opinion), when they became effective or
were filed with the Commission, as the case may be,
complied as to form in all material respects with the
requirements of the Securities Act, the Exchange Act
or the 1939 Act, as applicable, and the rules and
regulations of the Commission thereunder;
(J) The statements contained in the
Prospectus under the caption "Federal Income Tax
Considerations," insofar as they describe federal
statutes, rules and regulations, are correct in all
material respects;
(K) To the best of such counsel's
knowledge, there are no contracts or other documents
which are required to be described in the Prospectus
or filed as exhibits to the Registration Statement by
the Securities Act or by the Rules and Regulations
which have not been described or filed as exhibits to
the Registration Statement or incorporated therein by
reference as permitted by the Rules and Regulations;
(L) This Agreement has been duly
executed and delivered by the Company;
(M) The issue and sale of the Securities
being delivered at the Closing Time by the Company
and the compliance by the Company with
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all of the provisions of this Agreement and the
Indenture and the consummation of the transactions
contemplated therein will not conflict with or result
in a breach or violation of any of the terms or
provisions of, or constitute a default under, any
agreement or instrument which is filed as an exhibit
to (i) the Company's Form 10-Q for the fiscal quarter
ended March 31, 1996 or (ii) the Company's Form 10-K
for the year ended December 31, 1995 (other than the
purchase and sale agreements listed as Exhibits
10.38, 10.39 and 10.45 to 10.49 of such Form 10-K),
nor will such actions result in any violation of the
provisions of the charter or by-laws of the Company
or governing documents of any of the Affiliates or
any statute or any order, rule or regulation known to
such counsel of any court or governmental agency or
body having jurisdiction over the Company or any of
its properties or assets; and, except for such
consents, approvals, authorizations, registrations or
qualifications as have been obtained or made or may
be required under the Exchange Act and applicable
state securities laws in connection with the purchase
and distribution of the Securities by the
Underwriters, no consent, approval, authorization or
order of, or filing or registration with, any such
court or governmental agency or body is required for
the execution, delivery and performance of this
Agreement by the Company and the consummation of the
transactions contemplated hereby;
(N) To the best of such counsel's knowledge,
there are no contracts, agreements or understandings
between the Company and any person granting such
person the right to require the Company to file a
registration statement under the Securities Act with
respect to any securities of the Company owned or to
be owned by such person or to require the Company to
include such securities in the securities registered
pursuant to the Registration Statement or in any
securities being registered pursuant to any other
registration statement filed by the Company under the
Securities Act; and
(O) The Company has been and is organized in
conformity with the requirements for qualification as
a real estate investment trust under the Code, and
its method of operation has at all times enabled, and
its proposed method of operation as described in the
Prospectus and as represented by management will
enable, the Company to meet the requirements for
taxation as a real estate investment trust under the
Code.
(ii) The favorable opinion, dated as of the
Closing Time, of Ballard Spahr Andrews & Ingersoll, counsel
for the Company with respect to matters of Maryland law, in
form and substance reasonably satisfactory to counsel for the
Underwriters, to the effect that:
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<PAGE> 19
(A) The Company has been duly
incorporated and is validly existing as a corporation
in good standing under the laws of the State of
Maryland and has all corporate power and authority to
own, lease and operate its properties as described in
the Prospectus, to conduct the business in which it
is engaged and to perform its obligations under this
Agreement;
(B) This Agreement, the Indenture and
the Securities have been duly authorized by the
Company;
(C) The Company has an authorized
capitalization as set forth in the Prospectus;
(iii) The favorable opinion, dated as of the
Closing Time, of Latham & Watkins, counsel for the
Underwriters, with respect to such matters as the Underwriters
may reasonably request.
(iv) In giving their opinions required by
subsections (b)(i) and (b)(ii), respectively, of this Section
5, Gibson, Dunn & Crutcher LLP and Latham & Watkins shall each
additionally state that nothing has come to their attention
that would lead them to believe that the Registration
Statement (except for financial statements and schedules and
other financial and related statistical data included or
incorporated by reference therein, as to which counsel need
make no statement), at the time it became effective, contained
an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading or that the
Prospectus (except for financial statements and schedules and
other financial and related statistical data included or
incorporated by reference therein, as to which counsel need
make no statement), at the time the Prospectus was issued
(unless the term "Prospectus" refers to a prospectus which has
been provided to the Underwriters by the Company for use in
connection with the offering of Securities which differs from
the Prospectus on file at the Commission at the time the
Registration Statement becomes effective, in which case at the
date of such prospectus), or at the Closing Time, included or
includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading. In giving its opinion,
Gibson, Dunn & Crutcher LLP and Latham & Watkins may rely as
to matters of Maryland law upon the opinion of Ballard Spahr
Andrews & Ingersoll, which opinions shall be in form and
substance reasonably satisfactory to counsel for the
Underwriters. Each such opinion required by subsections
(b)(i) and (b)(ii) shall not state that it is to be governed
or qualified by, or that it is otherwise subject to, any
treatise, written policy or other document relating to legal
opinions,
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<PAGE> 20
including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
(c) Closing Matters. At the Closing Time, (i) the
Registration Statement and the Prospectus shall contain all statements that are
required to be stated therein in accordance with the 1933 Act and the 1933 Act
Regulations and in all material respects shall conform to the requirements of
the 1933 Act and the 1933 Act Regulations, and neither the Registration
Statement nor the Prospectus shall contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading, (ii) the
representations and warranties in Section 1 hereof shall be true and correct
with the same force and effect as though expressly made at and as of the
Closing Time, (iii) there shall not have been, since the date hereof or since
the respective dates as of which information is given in the Prospectus, any
material adverse effect on the consolidated financial position, stockholders'
equity, results of operations, business affairs or business prospects of the
Company, whether or not arising in the ordinary course of business, (iv) no
action, suit or proceedings at law or in equity shall be pending or, to the
knowledge of the Company, threatened against such entity or any Affiliate
before or by any court or governmental agency wherein an unfavorable decision,
ruling or finding might result in any material adverse effect on the
consolidated financial position, stockholders' equity, results of operations,
business affairs or business prospects of the Company other than as set forth
in the Prospectus, (v) no stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no proceedings
for that purpose have been instituted or, to the knowledge of the Company,
threatened by the Commission or by the state securities authority of any
jurisdiction and (vi) the Underwriters shall have received, at the Closing
Time, a Certificate of the Chief Executive Officer and the chief financial or
chief accounting officer of the Company, dated as of the Closing Time, stating
its compliance with subparagraphs (i) through (v) of this subsection (c), and
stating that the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to Closing
Time. As used in this Section 5(c) the term "Prospectus" means the Prospectus
in the form first used by the Underwriters to confirm sales of the Securities.
(d) Accountant's Comfort Letter. At the time of the
execution of this Agreement, the Underwriters shall have received from Ernst &
Young LLP a letter dated such date, in form and substance reasonably
satisfactory to the Underwriters, together with signed or reproduced copies of
such letter for each of the other Underwriters, containing statements and
information of the type ordinarily included in accountants' "comfort letters"
to underwriters with respect to the financial statements, pro forma financial
statements and pro forma and adjusted financial statements and information of
the Company and its affiliates and certain financial information contained in
the Registration Statement and the Prospectus.
(e) Bring-down Comfort Letter. At the Closing Time, the
Underwriters shall have received from Ernst & Young LLP a letter, dated as of
the Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (d)
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of this Section 5, except that the specified date referred to shall be a date
not more than five days prior to the Closing Time.
(f) Maintenance of Rating. Since the date of this
Agreement, there shall not have occurred a downgrading in the rating assigned
to the Securities or any of the Company's other debt securities by any
nationally recognized securities rating agency, and no such securities rating
agency shall have publicly announced that it has under surveillance or review
its rating of the Securities or any of the Company's other debt securities.
(g) No Objection. The NASD shall not have raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(h) Additional Documents. At the Closing Time, counsel
for the Underwriters shall have been furnished with such documents and opinions
as they may reasonably request for the purpose of enabling them to pass upon
the issuance and sale of the Securities as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and
sale of the Securities as herein contemplated shall be reasonably satisfactory
in form and substance to the Underwriters and counsel for the Underwriters.
If any condition specified in this Section 5 shall not have
been fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriters by notice to the Company at any time at or prior
to the Closing Time and such termination shall be without liability of any
party to any other party except as provided in Section 4 and except that
Sections 1, 6 and 7 hereof shall survive any such termination and remain in
full effect.
SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, as
follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment
thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading;
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(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever for
which indemnification is provided under subsection (i) above,
if (subject to Section 6(d) below) such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever
(including, the fees and charges of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever for which indemnification
is provided under subsection (i) above, to the extent that any
such expense is not paid under subsection (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information contained in the last paragraph
on the front cover page, the first paragraph on the inside front cover page and
the third paragraph in the section of the Prospectus Supplement under the
heading "UNDERWRITING" and furnished to the Company by any Underwriter
expressly for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto); and provided further,
that this indemnity agreement with respect to any preliminary prospectus
supplement shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, liabilities, claims, damages or expenses
purchased Securities, or any person controlling such Underwriter, if a copy of
the Prospectus (as then amended or supplemented if the Company shall have
furnished any such amendments or supplements thereto, but excluding documents
incorporated or deemed to be incorporated by reference therein) was not sent or
given by or on behalf of such Underwriter to such person, if such is required
by law, at or prior to the written confirmation of the sale of such Securities
to such person and if the Prospectus (as so amended or supplemented, if
applicable) would have completely corrected the defect giving rise to such
loss, liability, claim, damage or expense, except that this proviso shall not
be applicable if such defect shall have been corrected in a document which is
incorporated or deemed to be incorporated by reference in the Prospectus.
(b) Each Underwriter severally agrees to indemnify and
hold harmless the Company, the Company's directors, each of the officers of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section 6, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment
22
<PAGE> 23
thereto) or the Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with written information contained in the last paragraph
on the front cover page, the first paragraph on the inside front cover page and
the third paragraph in the section of the Prospectus Supplement under the
heading "UNDERWRITING" and furnished to the Company by such Underwriter
expressly for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly
as reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability which it may have to the extent it is not materially
prejudiced as a result thereof and in any event shall not relieve it from any
liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of any such action; provided, however, that counsel to the indemnifying
party shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the indemnifying parties
be liable for fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for the
reasonable fees and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement of the nature contemplated by Section
6(a)(ii) effected without its written consent if (i) such settlement is entered
into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. Contribution. If the indemnification provided for
in Section 6 hereof is for any reason unavailable to or insufficient (other
than by reason of the indemnified party not being entitled to indemnification
in accordance with the specific terms of Section 6 hereof) to hold harmless an
indemnified party in respect of any losses, liabilities, claims,
23
<PAGE> 24
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one hand and
of the Underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters,
in each case as set forth on the cover of the Prospectus, or, if Rule 434 is
used, the corresponding location on the Term Sheet, bear to the aggregate
initial public offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purposes) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total discount received by it exceeds the amount of any damages
which such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
24
<PAGE> 25
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act, shall have the same rights to contribution as the Company. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement, or contained in certificates of officers of the Company
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) The Underwriters may terminate this Agreement, by
notice to the Company, at any time at or prior to the Closing Time (i) if there
has been, since the date of this Agreement or since the respective dates as of
which information is given in the Registration Statement, any material adverse
effect on the consolidated financial position, stockholders' equity, results of
operations, business affairs or business prospects of the Company, or (ii) if
there has occurred any material adverse change in the financial markets in the
United States or elsewhere or any outbreak of hostilities or escalation thereof
or other calamity or crisis the effect of which is such as to make it, in the
judgment of the Underwriters, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or limited by the Commission or
the New York Stock Exchange or if trading generally on either the New York
Stock Exchange or the American Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said Exchanges or by order of the
Commission or any other governmental authority, or if a banking moratorium has
been declared by either federal or New York authorities.
(b) If this Agreement is terminated pursuant to this
Section 9, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further that
Sections 1, 6 and 7 shall survive such termination and remain in full force and
effect.
25
<PAGE> 26
SECTION 10. Default by One of the Underwriters. If one of
the Underwriters shall fail at the Closing Time to purchase the Securities
which it is obligated to purchase under this Agreement (the "Defaulted
Securities"), the other Underwriter shall have the right, within 24 hours
thereafter, to make arrangements for it, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, such
arrangements have not been completed within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed
10% of the number of Securities to be purchased on such date, the
non-defaulting Underwriter shall be obligated to purchase the full
amount thereof, or
(b) if the number of Defaulted Securities exceeds 10% of
the number of Securities to be purchased on such date, this Agreement
shall terminate without liability on the part of any non-defaulting
Underwriter.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Underwriters or the Company shall
have the right to postpone the Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10.
SECTION 11. Default by the Company. If the Company shall
fail at Closing Time to sell the number of Securities that it is obligated to
sell hereunder, then this Agreement shall terminate without any liability on
the part of any non-defaulting party; provided, however, that the provisions of
Sections 4, 6 and 7 shall remain in full force and effect. No action taken
pursuant to this Section shall relieve the Company from liability, if any, in
respect of such default.
SECTION 12. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to
the Underwriters shall be directed to the Underwriters at Merrill Lynch World
Headquarters, North Tower, World Financial Center, New York, New York
10281-1201, attention of Equity Capital Markets; notices to the Company shall
be directed to it at 145 South Fairfax Avenue, 4th Floor, Los Angeles,
California 90036, attention of Joseph K. Kornwasser.
SECTION 13. Parties. This Agreement shall inure to the
benefit of and be binding upon the Underwriters and the Company and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person,
26
<PAGE> 27
firm or corporation, other than the Underwriters, the Company and their
respective successors and the controlling persons and officers and directors
referred to in Sections 6 and 7 hereof and their successors, heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement
and all conditions and provisions hereof and thereof are intended to be for the
sole and exclusive benefit of the Underwriters, the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK
CITY TIME.
SECTION 15. Effect of Headings. The Article and Section
headings herein are for convenience only and shall not affect the construction
hereof.
27
<PAGE> 28
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the Underwriters and the Company in accordance with its terms.
Very truly yours,
THE PRICE REIT, INC.
By /s/ Joseph K. Kornwasser
---------------------------------
Joseph K. Kornwasser,
President and Chief Executive Officer
S-1
<PAGE> 29
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
J.P. MORGAN & CO.
J.P. Morgan Securities Inc.
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By /s/ S. Todd Canty
------------------------
Name: S. Todd Canty
Title: Vice President
S-2
<PAGE> 30
SCHEDULE A
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
NAME OF UNDERWRITER SECURITIES
------------------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . . . . . . . . . . . . . . $44,000,000
J.P. Morgan Securities Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000,000
-----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $55,000,000
===========
</TABLE>
Schedule A-1
<PAGE> 31
SCHEDULE B
1. The initial public offering price of the Securities shall be
99.764% of the principal amount thereof, plus accrued
interest, if any, from the date of issuance.
2. The purchase price to be paid by the Underwriters for the
Securities shall be 99.014% of the principal amount thereof.
3. The interest rate on the Securities shall be 7-1/2% per annum.
Schedule B-1
<PAGE> 1
EXHIBIT 4.1
[COPY]
REGISTERED No: PRINCIPAL AMOUNT
$55,000,000
CUSIP NO.: 74147T AB1
THE PRICE REIT, INC.
7 1/2% SENIOR NOTE DUE 2006
THE PRICE REIT, INC., a Maryland corporation (hereinafter called the
"Company", which term shall include any successor corporation under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to Cede & Co., or registered assignee (the "Holder"), upon presentation, the
principal sum of $55,000,000 DOLLARS on November 5, 2006, and to pay interest on
the outstanding principal amount thereon from November 5, 1996, or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, semi-annually in arrears on May 5 and October 5 in each year (each an
"Interest Payment Date"), commencing May 5, 1997, and at the Stated Maturity, at
the rate of 7 1/2% per annum, computed on the basis of a 360-day year comprised
of twelve 30-day months, until the entire principal amount hereof is paid or
made available for payment. The interest so payable, and punctually paid or duly
provided for on any Interest Payment Date will, as provided in the Indenture, be
paid to the Person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the Regular Record Date for such Interest
Payment Date which shall be the 15th calendar day preceding the applicable
Interest Payment Date. Any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may either be paid to the Person in whose name this Note (or
one or more predecessor Notes) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Notes of this series
not more than 15 days and not less than 10 days prior to such Special Record
Date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture. Payments of the principal of, and interest on,
this Note will be made at the office or agency of the Trustee (hereinafter
defined) maintained for that purpose at 550 South Hope Street, Suite 500, Los
Angeles, California 90071, or elsewhere as provided in the Indenture, in United
States Dollars; provided, however, that at the option of the Holder hereof
payment of interest may be made by (i) check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register kept for
the Notes pursuant to Section 305 of the Indenture (the "Note Register") or (ii)
transfer to an account of the Person entitled thereto located inside the United
States.
This Note is one of a fully authorized issue of securities of the
Company (herein called the "Notes"), issued as a series of securities issued and
to be issued under an Indenture, dated as of October 27, 1995 (herein called the
"Indenture"), between the Company and First Trust of California, National
Association (herein called the "Trustee," which term includes any successor
trustee under the Indenture with respect to the Notes), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations
<PAGE> 2
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered. This Note is one of the series designated as the
"7 1/2% Senior Notes Due 2006," limited in aggregate principal amount to
$55,000,000.
The Notes may be redeemed at any time after November 5, 2001, at the
option of the Company, in whole or from time to time in part, at a redemption
price equal to the sum of (i) the principal amount of the Notes (or portion
thereof) being redeemed plus accrued interest thereon to the redemption date and
(ii) the Make-Whole Amount (as defined below), if any, with respect to such
Notes (or portion thereof) (the "Redemption Price").
If notice has been given as provided in the Indenture and funds for the
redemption of any Notes (or any portion thereof) called for redemption
shall have been made available on the redemption date referred to in such
notice, such Notes (or any portion thereof) will cease to bear interest on the
date fixed for such redemption specified in such notice and the only right of
the Holders of such Notes will be to receive payment of the Redemption Price.
Notice of any optional redemption of any Notes (or any portion thereof)
will be given to Holders at their addresses, as shown in the security register
for such Notes, not more than 60 nor less than 30 days prior to the date fixed
for redemption. The notice of redemption will specify, among other things, the
Redemption Price and the principal amount of the Notes held by such Holder to be
redeemed.
The Company will notify the Trustee at least 45 days prior to giving
notice of redemption (or such shorter period as is satisfactory to the Trustee)
of the aggregate principal amount of such Notes to be redeemed and their
redemption date. If less than all of the Notes are to be redeemed at the
option of the Company, the Trustee shall select, in such manner as it shall
deem fair and appropriate, such Notes to be redeemed in whole or in part.
"Make-Whole Amount" means, in connection with any optional redemption
of any Notes, the excess, if any, of (i) the aggregate present value as of the
date of such redemption of each dollar of principal being redeemed and the
amount of interest (exclusive of interest accrued to the date of redemption)
that would have been payable in respect of each such dollar if such redemption
had not been made, determined by discounting, on a semi-annual basis, such
principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is given) from the
respective dates on which such principal and interest would have been payable if
such redemption had not been made, over (ii) the aggregate principal amount of
the Notes being redeemed or paid.
"Reinvestment Rate" means 0.25% plus the arithmetic mean of the yields
under the respective heading "Week Ending" published in the most recent
Statistical Release under the caption "Treasury Constant Maturities" for the
maturity (rounded to the nearest month) corresponding to the remaining life to
maturity, as of the payment date of the principal being redeemed or paid. If no
maturity exactly corresponds to such maturity, yields for the two published
maturities most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate shall
be interpolated or
2
<PAGE> 3
extrapolated from such yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. For the purpose of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded United
States government securities adjusted to constant maturities, or, if such
statistical release is not published at the time of any determination under the
Indenture, then such other reasonably comparable index which shall be
designated by the Company.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Note and (b) certain restrictive
covenants and the related defaults and Events of Default applicable to the
Company, in each case, upon compliance by the Company with certain conditions
set forth in the Indenture, which provisions apply to this Note.
In addition to the covenants of the Company contained in the Indenture,
the Company makes the following covenants with respect to, and for the benefit
of the Holders of, the Notes:
Limitation on Debt. The Company will not, and will not permit any
subsidiary to, incur any Debt if, after giving effect thereto, the
aggregate outstanding principal amount of all Debt of the Company and
its subsidiaries is greater than fifty percent (50%) of the sum of (i)
the Company's Total Assets at the end of the Company's fiscal quarter
ended immediately prior to the incurrence of such Debt and (ii) the
aggregate purchase price of real estate assets acquired after such
immediately preceding fiscal quarter, including any such assets acquired
in connection with the incurrence of such additional Debt.
Limitation on Secured Debt. The Company will not, and will not permit
any Subsidiary to, incur any Debt secured by any mortgage or other lien
upon any of its properties, and will not otherwise grant or convey any
such mortgage or other lien, if, after giving effect thereto, the
aggregate outstanding principal amount of secured Debt is greater than
thirty percent (30%) of the sum of (i) the Company's Total Assets at the
end of the Company's fiscal quarter ended immediately prior to the
incurrence of such Debt and (ii) the aggregate purchase price of real
estate assets acquired after such immediately preceding fiscal quarter,
including any such assets acquired in connection with the incurrence of
such additional Debt.
Interest Expense Coverage. The Company will not incur any Debt if,
after giving effect to the incurrence of such Debt, the Company's ratio
of Total Cash Flow to Total Interest Expense, at the end of each fiscal
year of the Company, will have been less than 2:1, on a pro forma basis
after giving effect thereto and to the application of the proceeds
therefrom, and calculated on the assumption that (i) such Debt and any
other Debt incurred by the Company since the first day of such fiscal
year and the application of the proceeds therefrom, including to
refinance other Debt, had occurred at the beginning of such fiscal year;
(ii) the repayment or retirement of any other Debt by the Company since
the first day of such fiscal year had been repaid or retired at the
beginning of such period
3
<PAGE> 4
(except that, in making such computation, the amount of Debt under any
revolving credit facility shall be computed based upon the average daily
balance of such Debt during such period); (iii) in the case of Acquired
Debt or Debt incurred in connection with any acquisition since the first
day of such fiscal year, the related acquisition had occurred as of the
first day of such period with the appropriate adjustments with respect
to such acquisition being included in such pro forma calculation; and
(iv) in the case of any acquisition or disposition by the Company of any
asset or group of assets since the first day of such fiscal year,
whether by merger, stock purchase or sale, or asset purchase or sale,
such acquisition or disposition or any related repayment of Debt had
occurred as of the first day of such period with the appropriate
adjustments with respect to such acquisition or disposition being
included in such pro forma calculation.
Maintenance of Total Unencumbered Assets. The Company will maintain
Total Unencumbered Assets of not less than 200% of the aggregate
outstanding principal amount of all unsecured Debt of the Company.
Restrictions on Distributions. The Company will not make any payment of
dividends if the aggregate amount of dividends paid in the twelve months
preceding the dividend payment date (including the dividends paid on
such date) will exceed 95% of its Funds From Operations in the period of
twelve consecutive months ended on the last day of the last month ended
prior to such payment date; provided, however, that the foregoing
restriction shall not apply to any payment of dividends or other action
which is necessary to maintain the Company's status as a REIT for
federal income tax purposes.
As used herein, the following terms have the meanings set forth below:
"Acquired Debt" means Debt of a Person (i) existing at the time such
Person becomes a subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Debt
incurred in connection with, or in contemplation of, such Person
becoming a subsidiary or such acquisition. Acquired Debt shall be deemed
to be incurred on the date of the related acquisition of assets from any
Person or the date the acquired Person becomes a subsidiary.
"Debt" means any indebtedness of the Company or any subsidiary in
respect of (i) borrowed money or evidenced by bonds, notes, debentures
or similar instruments, (ii) indebtedness secured by any mortgage,
pledge, lien, charge, encumbrance or any security interest existing on
property owned by the Company or any Subsidiary, (iii) letters of credit
or amounts representing the balance deferred and unpaid of the purchase
price of any property except any such balance that constitutes an
accrued expense or trade payable or (iv) capitalized leases, in the case
of items of indebtedness under (i) through (iii) above to the extent
that any such items (other than letters of credit) would appear as a
liability on the Company's consolidated balance sheet in accordance with
GAAP, and also includes, to the extent not otherwise included, any
obligation by the Company or any Subsidiary to be liable for, or to pay,
as obligor, guarantor or otherwise (other than for purposes of
collection in the ordinary course of business), indebtedness of another
person (other than the Company or any subsidiary).
4
<PAGE> 5
"Funds From Operations" means consolidated net income, computed in
accordance with GAAP, excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization,
and after adjustments for unconsolidated partnerships and joint
ventures. Adjustments for unconsolidated partnerships and joint
ventures will be calculated to reflect Funds From Operations on the same
basis. The Company computes Funds From Operations in accordance with
standards established by the National Association of Real Estate
Investment Trusts.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Total Assets" means total assets of the Company on a consolidated
basis, computed in accordance with GAAP, plus accumulated depreciation.
"Total Cash Flow" means, for any period, consolidated net income of the
Company, computed in accordance with GAAP, excluding gains (or losses)
from debt restructuring and sales of property, plus depreciation and
amortization, Total Interest Expense and provisions for income taxes,
all to the extent deducted in computing consolidated net income and
after adjustments for deferred rent and unconsolidated partnerships and
joint ventures.
"Total Interest Expense" means, for any period, the aggregate amount,
computed in accordance with GAAP, of interest expense incurred during
such period by the Company on a consolidated basis in respect of all
Debt, including interest capitalized to construction-in-process; less
amortization of capitalized loan fees, costs and expenses incurred in
connection with such Debt or in connection with interest rate caps,
collars, swaps, or similar agreements in respect of any such Debt, all
to the extent included in the computation of interest expense.
"Total Unencumbered Assets" means the aggregate book value of all assets
of the Company and its subsidiaries, plus accumulated depreciation,
which are not subject to any mortgage, pledge, lien, security interest
or other encumbrance.
If an Event of Default as defined in the Indenture with respect to the
Notes shall occur and be continuing, the principal of the Notes may be declared
due and payable in the manner and with the effect provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the
Holder of this Note shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity and the Trustee shall not have
5
<PAGE> 6
received from the Holders of a majority in principal amount of the Notes at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Note for the enforcement of any payment
of principal hereof or any interest on or after the respective due dates
expressed herein.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes under the Indenture at any
time by the Company and the Trustee with the consent of the Holders of not less
than a majority in principal amount of the Outstanding Notes. The Indenture
also contains provisions permitting the Holders of not less than a majority in
principal amount of the Notes at the time Outstanding, on behalf of the Holders
of all Notes, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future Holders of this Note
and of any Note issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and interest on, this Note
at the times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Note Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Company in any Place of Payment where the principal of, and interest on,
this Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar for the Notes duly executed by, the Holder hereof or his attorney duly
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Notes of this series are exchangeable for a like aggregate principal amount of
Notes of this series of a different authorized denomination, as requested by
the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall, be affected by notice to the contrary.
6
<PAGE> 7
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE NOTES INCLUDING THIS NOTE, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused "CUSIP" numbers to
be printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the correctness or accuracy of such CUSIP numbers
as printed on the Notes, and reliance may be placed only on the other
identification numbers printed hereon.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any purposes.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal this ____ day of _____________, 199_.
THE PRICE REIT, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Attest:
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
[SEAL]
7
<PAGE> 8
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Notes of the series designated "7-1/2% Senior Notes
Due 2006" pursuant to the within-mentioned Indenture.
[ ],
--------------------------
By:
------------------------
Authorized Signatory
8
<PAGE> 1
EXHIBIT 4.2
OFFICERS' CERTIFICATE
Pursuant to Section 301 of the Indenture, dated as of October 27, 1995,
between The Price REIT, Inc., a Maryland corporation (the "Company"), and
First Trust of California, National Association, as trustee, the undersigned
hereby certify that attached hereto are true and complete copies of the
resolutions duly and validly adopted by the Board of Directors of the Company,
by unanimous written consent of the Board dated as of October 30, 1996, and
that such resolutions are now in full force and have not been modified,
amended or revoked in any respect.
By: /s/ Joseph K. Kornwasser
-------------------------------
Joseph K. Kornwasser
President and Chief Executive Officer
By: /s/ George M. Jezek
-------------------------------
George M. Jezek
Chief Financial Officer
<PAGE> 2
CREATION OF SENIOR NOTES
WHEREAS, the Company has heretofore filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(File No. 33-95832) (the "Registration Statement") relating to the sale of up
to $175,000,000 of one or more of (i) common stock or common shares, par value
(0.01 per share, of the Company, (ii) preferred stock, par value $0.01 per
share, of the Company, (iii) depository shares of the Company, (iv) debt
securities of the Company, (v) warrants to purchase common stock, (vi) warrants
to purchase preferred stock and (vii) warrants to purchase debt securities; and
Securities and the Commission declared the Registration Statement effective on
September 1, 1995; and such Registration Statement continues to be effective on
the date hereof; and
WHEREAS, the Board of Directors has determined to issue a series of
senior debt securities (the "Notes") pursuant to the Indenture dated as of
October 27, 1995 (the "Indenture"), between the Company and First Trust of
California, National Association, as Trustee (the "Trustee"), and to offer and
sell the Notes to Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and J.P. Morgan Securities, Inc. (collectively, the
"Underwriters"), pursuant to purchase agreement (the "Purchase Agreement")
between the Company and the Underwriters, for reoffering by the Underwriters to
the public;
RESOLVED, that in accordance with Section 301 of the Indenture, the
following terms of the Notes are hereby established (terms used in these
resolutions having the same definitions as in the Indenture):
(1) The Notes shall constitute a series of Securities having the title
"7 1/2% Senior Notes due 2006," with the interest rate to be inserted in such
designation upon determination thereof and hereinafter provided.
(2) The aggregate principal amount of the Notes that may be
authenticated and delivered under the Indenture (except for Notes authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Notes pursuant to Sections 304, 305, 306, 906, 1107 or 1305 of the
Indenture) shall be up to $60 million.
(3) The entire outstanding principal of the Notes shall be payable ten
years from the date of issuance (the "Maturity Date").
(4) A Special Pricing Committee, which is established by these
Resolutions and which consists of Raymond E. Peet, Joseph K. Kornwasser, George
M. Jezek and Keene Wolcott, is authorized and directed to determine (i) the
interest rate, Maturity Date and other terms applicable to the Notes, consistent
with these resolutions and (ii) the aggregate principal amount of the Notes that
may be authenticated and delivered under the Indenture provided that such
aggregate amount shall not be more than $60 million; the date from which
interest shall accrue shall be determined by the Special Pricing Committee; the
Interest Payment Dates for these Notes on which interest will be payable shall
be May 5 and November 5 in each year, beginning May 5, 1997; the Regular Record
Dates for the interest payable on the Notes on any Interest Payment
<PAGE> 3
Date shall be the 15th calendar day preceding the applicable Interest Payment
Date; and the basis upon which interest shall be calculated shall be that of a
360-day year consisting of twelve 30-day months.
(5) The place where the principal of and interest on the Notes shall
be payable and Notes may be surrendered for the registration of transfer or
exchange shall be the Corporate Trust Office of the Trustee at 550 South Hope
Street, Suite 500, Los Angeles, California 90071. The place where notices or
demands to or upon the Company in respect of the Notes and the indenture may be
served shall be the Corporate Trust Office of the Trustee.
(6) The Notes shall be redeemable at any time after November 5, 2001
at the option of the Company, in whole or in part, at a redemption price equal
to the sum of (i) the principal amount of the Notes being redeemed plus accrued
interest to the redemption date and (ii) the Make-Whole Amount (as defined
below), if any.
(7) The Notes shall not be redeemable at the option of any Holder
thereof, upon the occurrence of any particular circumstances or otherwise. The
Notes will not have the benefit of any sinking fund.
(8) The Notes shall be issuable in denominations of $1,000 and any
integral multiple thereof.
(9) The Trustee shall also be the Security Registrar and Paying Agent.
(10) The entire outstanding principal amount of the Notes shall be
payable upon declaration of acceleration of the maturity thereof pursuant to
Section 502 of the Indenture.
(11) Payments of the principal of and interest on the Notes shall be
made in Dollars, and the Notes shall be denominated in Dollars.
(12) The Notes will be payable on the Maturity Date in an amount equal
to the principal amount thereof plus unpaid interest accrued to the Maturity
Date.
(13) The Holders of the Notes shall have no special rights in
addition to those provided in the Indenture upon the occurrence of any
particular events.
(14) (A) There shall be no deletions from, modifications of or
additions to the Events of Default with respect to the Notes set forth in the
Indenture.
(B) There shall be the following additions to the covenants set
forth in the Indenture with respect to the Notes, which shall be effective only
for so long as any of the Notes is Outstanding:
Limitation on Debt. The Company will not, and will not permit any
Subsidiary to, incur any Debt if, after giving effect thereto, the aggregate
outstanding principal amount of all Debt of the Company and its Subsidiaries is
greater than fifty percent (50%) of the sum of (i) the Company's Total Assets
at the end of the Company's fiscal quarter ended immediately prior to the
2
<PAGE> 4
incurrence of such Debt and (ii) the aggregate purchase price of real estate
assets acquired after such immediately preceding fiscal quarter, including any
such assets acquired in connection with the incurrence of such additional Debt.
Limitation on Secured Debt. The Company will not, and will not permit
any Subsidiary to, incur any Debt secured by any mortgage or other lien upon
any of its properties, and will not otherwise grant or convey any such mortgage
or other lien, if, after giving effect thereto, the aggregate outstanding
principal amount of secured Debt is greater than thirty percent (30%) of the
sum of (i) the Company's Total Assets at the end of the Company's fiscal
quarter ended immediately prior to the incurrence of such Debt and (ii) the
aggregate purchase price of real estate assets acquired after such immediately
preceding fiscal quarter, including any such assets acquired in connection with
the incurrence of such additional Debt.
Interest Expense Coverage. The Company will not incur any Debt if,
after giving effect to the incurrence of such Debt, the Company's ratio of
Total Cash Flow to Total Interest Expense, at the end of each fiscal year of
the Company, will have been less than 2:1, on a pro forma basis after giving
effect thereto and to the application of the proceeds therefrom, and calculated
on the assumption that (i) such Debt and any other Debt incurred by the Company
since the first day of such fiscal year and the application of the proceeds
therefrom, including the refinance other Debt, had occurred at the beginning of
such fiscal year; (ii) the repayment or retirement of any other Debt by the
Company since the first day of such fiscal year had been repaid or retired at
the beginning of such period (except that, in making such computation, the
amount of Debt under any revolving credit facility shall be computed based upon
the average daily balance of such Debt during such period); (iii) in the case
of Acquired Debt or Debt incurred in connection with any acquisition since the
first day of such fiscal year, the related acquisition had occurred as of the
first day of such period with the appropriate adjustments with respect to such
acquisition being included in such pro forma calculations; and (iv) in the case
of any acquisition or disposition by the Company of any asset or group of
assets since the first day of such fiscal year, whether by merger, stock
purchase or sale, or asset purchase or sale, such acquisition or disposition or
any related repayment of Debt had occurred as of the first day of such period
with the appropriate adjustments with respect to such acquisition or
disposition being included in such pro forma calculation.
Maintenance of Total Unencumbered Assets. The Company will maintain at
all times Total Unencumbered Assets of not less than 200% of the aggregate
outstanding principal amount of all unsecured Debt of the Company.
Restrictions on Distributions. The Company will not make any payment
of dividends if the aggregate amount of dividends paid in the twelve months
preceding the dividend payment date (including the dividends paid on such date)
will exceed 95% of its Funds From Operations in the period of twelve
consecutive months ended on the last day of the last month ended prior to such
payment date; provided, however, that the foregoing restriction shall not apply
to any payment of dividends or other action which is necessary to maintain the
Company's status as a REIT for federal income tax purposes.
(C) As used in the Notes, the following terms shall have the
meanings set forth
3
<PAGE> 5
below:
"Acquired Debt" means Debt of a Person (i) existing at the time such
Person becomes a subsidiary or (ii) assumed in connection with the acquisition
of assets from such Person, in each case, other than Debt incurred in
connection with, or in contemplation of, such Person becoming a subsidiary or
such acquisition. Acquired Debt shall be deemed to be incurred on the date of
the related acquisition of assets from any Person or the date the acquired
Person becomes a subsidiary.
"Debt" means any indebtedness of the Company or any subsidiary, in
respect of (i) borrowed money or evidenced by bonds, notes debentures or
similar instruments, (ii) indebtedness secured by any mortgage, pledge, lien,
charge, encumbrance or any security interest existing on property owned by the
Company or any subsidiary, (iii) letters of credit or amounts representing the
balance deferred and unpaid of the purchase price of any property except any
such balance that constitutes an accrued expense or trade payable or (iv)
capitalized leases, in the case of items of indebtedness under (i) through
(iii) above to the extent that any such items (other than letters of credit)
would appear as a liability on the Company's Consolidated Balance Sheet in
accordance with GAAP, and also includes, to the extent not otherwise included,
any obligation by the Company or any subsidiary to be liable for, or to pay, as
obligor, guarantor or otherwise (other than for purposes of collection in the
ordinary course of business), indebtedness of another person (other than the
Company or any subsidiary).
"Funds From Operations" means consolidated net income, computed in
accordance with GAAP, excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation and amortization, and after adjustments
for unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures will be calculated to reflect
Funds From Operations on the same basis. The Company computes Funds From
Operations in accordance with standards established by NAREIT.
"Make-Whole Amount" means, in connection with any optional redemption
of any Notes, the excess, if any, of (i) the aggregate present value as of the
date of such redemption of each dollar of principal being redeemed and the
amount of interest (exclusive of interest accrued to the date of redemption)
that would have been payable in respect of each such dollar if such redemption
had not been made, determined by discounting, on a semi-annual basis, such
principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is given) from the
respective dates on which such principal and interest would have been payable
if such redemption had not been made, over (ii) the aggregate principal amount
of the Notes being redeemed or paid.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Reinvestment Rate" means 0.25% plus the arithmetic mean of the yields
under the respective heading "Week Ending" published in the most recent
Statistical Release under the caption "Treasury Constant Maturities" for the
maturity (rounded to the nearest month)
4
<PAGE> 6
corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed or paid. If no maturity exactly corresponds to such
maturity, yields for the two published maturities most closely corresponding to
such maturity shall be calculated pursuant to the immediately preceding
sentence and the Reinvestment Rate shall be interpolated or extrapolated from
such yields on a straight-line basis, rounding in each of such relevant periods
to the nearest month. For the purpose of calculating the Reinvestment Rate,
the most recent Statistical Release published prior to the date of
determination of the Make-Whole Amount shall be used.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded United
States government securities adjusted to constant maturities, or, if such
statistical release is not published at the time of any determination under the
Indenture, then such other reasonably comparable index which shall be
designated by the Company.
"Total Assets" means total assets of the Company on a consolidated
basis, computed in accordance with GAAP, plus accumulated depreciation.
"Total Cash Flow" means, for any period, consolidated net income of the
Company computed in accordance with GAAP, excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization, Total
Interest Expense, and provisions for income taxes, all to the extent deducted
in computing consolidated net income and after adjustments for deferred rent
and unconsolidated partnerships and joint ventures.
"Total Interest Expense" means, for any period, the aggregate amount,
computed in accordance with GAAP, of interest expense incurred during such
period by the Company on a consolidated basis in respect of all Debt, including
interest capitalized to construction-in-process; less amortization of
capitalized loan fees, costs and expenses incurred in connection with such Debt
or in connection with interest rate caps, collars, wraps, or similar agreements
in respect of any such Debt, all to the extent included in the computation of
interest expense.
"Total Unencumbered Assets" means the aggregate book value of all assets
of the Company and its subsidiaries, plus accumulated depreciation, which are
not subject to any mortgage, pledge, lien, security interest or other
encumbrance.
(15) The Notes shall be issuable only as Registered Securities in
permanent global form (without coupons). Beneficial owners of interests in the
permanent global Notes may exchange such interests for Notes of like tenor or
any authorized form and denomination only in the manner provided in Section 305
of the Indenture. DTC shall be the depository with respect to the permanent
global Note. The form of such permanent global Note filed with the minutes of
this meeting and identified as Exhibit 1 is hereby approved.
(16) The Notes shall not be issuable as Bearer Securities.
5
<PAGE> 7
(17) Interest on any Note shall be payable only to the Person in whose
name that Note (or one or more predecessor Notes thereof) is registered at the
close of business on the Regular Record Date for such interest.
(18) Sections 1402 and 1403 of the Indenture shall be applicable to
the Notes.
(19) The Notes shall not be issuable in definitive form except under
the circumstances described in Section 305 of the Indenture.
(20) The Notes will not be issued upon the exercise of debt warrants.
The Notes will be authenticated and delivered as provided in Section 303 of the
Indenture.
(21) The Company shall not pay Additional Amounts with respect to the
Notes as contemplated by Section 1010 of the Indenture.
(22) The Notes shall not be convertible into Common Shares or
Preferred Shares.
(23) The Notes shall not be subordinated to any other debt of the
Company, and shall constitute senior unsecured obligations of the Company.
RESOLVED, that the form, terms and provisions of the form of Note
evidencing the Notes be, and hereby are, approved and each of the President and
the Chief Financial Officer of the Company is authorized, in the name and on
behalf of the Company and where appropriate under its corporate seal, attested
by its Secretary or an Assistant Secretary, to execute and deliver the Notes
and the Purchase Agreement in the forms approved by the executing officer, such
approval to be conclusively evidenced by such officer's execution thereof,
provided that any such change shall be consistent with all determinations made
by the Board of Directors in these resolutions.
RESOLVED, that all officers of the Company are authorized in the name
and on behalf of the Company to make, execute and deliver or cause to be made,
executed and delivered, and to evidence the approval of the Board of Directors
of, all such officers' certificates, depository agreements, letters of
representation or other agreements or arrangements necessary or appropriate in
connection with the administration of any book-entry arrangements for the
Notes, and such other agreements, undertakings, documents or instruments, and
to perform all such acts and make all such payments, as may, in the judgment of
such officers, be necessary, appropriate or desirable to effectuate the purpose
of these resolutions, including the performance of the obligations of the
Company under the Indenture, the Notes, the Purchase Agreement and any other
agreement, undertaking, documents or instruments referred to herein or therein.
RESOLVED, that any and all actions heretofore taken by the officers of
the Company pursuant to the authority conferred by the preceding three
resolutions and consistent therewith is ratified, approved and confirmed.
6
<PAGE> 1
Exhibit 5.1
November 5, 1996
The Price Reit, Inc.
7979 Ivanhoe Avenue
Suite 524
La Jolla, California 02037
Re: The Price Reit, Inc., a Maryland corporation, (the "Company") -
Registration Statements on Forms S-3 (Registration No. 33-95832
and Registration No. 333-15143), as supplemented pertaining to
the issuance of $55,000,000 aggregate principal amount of the
Company's 7 1/2% Senior Notes Due 2006 (the "Securities")
Ladies and Gentlemen:
In connection with the registration of the Securities under the
Securities Act of 1933 as amended (the "Act"), by the Company on the
Registration Statements on Forms S-3 (Registration No. 33-95832 and
Registration No. 333-15143) filed with the Securities and Exchange Commission
(the "Commission"), as supplemented by that certain Prospectus Supplement
(collectively the "Registration Statement"), you have requested our opinion
with respect to the matters set forth below.
We have acted as special Maryland corporate counsel for the Company in
connection with the matters described herein. In our capacity as special
Maryland corporate counsel to the Company, we have reviewed and are familiar
with proceedings taken and proposed to be taken by the Company in connection
with the authorization, issuance and sale of the Securities, and for purposes
of this opinion have assumed such proceedings will be timely completed in the
manner presently proposed. In addition, we have relied upon certificates and
advice from the officers of the Company upon which we believe we are justified
in relying and on various certificates from, and documents recorded with, the
State Department of Assessments and Taxation of Maryland (the "SDAT"),
including the charter of the Corporation (the "Charter"), consisting of
Articles of Amendment and Restatement filed with the SDAT on July 9, 1993,
Articles of Amendment filed with the SDAT on May 23, 1995, and Articles of
Amendment filed with the SDAT on June 13, 1996. We have also examined the
Amended and Restated Bylaws of the Company adopted as of June 9, 1993 (the
"Bylaws"), Resolutions of the Board
<PAGE> 2
BALLARD SPAHR ANDREWS & INGERSOLL
The Price Reit, Inc.
November 5, 1996
Page 2
of Directors of the Company, or the Pricing Committee thereof, adopted on or
as of July 1, 1996, August 28, 1996, September 9, 1996, September 26, 1996,
October 30, 1996 and October 31, 1996, each in full force and effect as of the
date hereof and an Indenture dated October 27, 1995, by and between the
Company and First Trust of California, National Association, as Trustee
(the "Indenture"); and such laws, records, documents, certificates, opinions
and instruments as we deem necessary to render this opinion.
We have assumed the genuineness of all signatures and the authenticity
of all documents submitted to us as originals and the conformity to the
originals of all documents submitted to us as certified, photostatic or
conformed copies. In addition, we have assumed that each person executing any
instrument, document or certificate referred to herein on behalf of any party
is duly authorized to do so.
Based on the foregoing, and subject to the assumptions and
qualifications set forth herein, it is our opinion that, as of the date of this
letter, the execution and delivery on behalf of the Company of the Indenture
and the Securities has been duly authorized by all necessary corporate action on
the part of the Company.
We consent to your filing this opinion as an exhibit to the
Registration Statement, and further consent to the filing of this opinion as an
exhibit to the applications to securities commissioners for the various states
of the United States for registration of the Shares. We also consent to the
identification of our firm as Maryland counsel to the Company in the section of
the Prospectus (which is part of the Registration Statement) entitled "Legal
Matters."
The opinions expressed herein are limited to the laws of the State of
Maryland and we express no opinion concerning any laws other than the laws of
the State of Maryland. Furthermore, the opinions presented in this letter are
limited to the matters specifically set forth herein and no other opinion shall
be inferred beyond the matters expressly stated.
The opinions expressed in this letter are solely for your use and may
not be relied upon by any other person without our prior written consent.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll
<PAGE> 1
Exhibit 5.2
[GIBSON, DUNN & CRUTCHER LLP LETTERHEAD]
November 5, 1996
(213) 229-7000 C 72752-00011
The Price REIT, Inc.
145 South Fairfax Avenue
Fourth Floor
Los Angeles, California 90036
Re: The Price REIT, Inc.
Ladies and Gentlemen:
We have acted as special counsel to The Price REIT, Inc., a
Maryland corporation (the "Company"), in connection with the issuance and sale
by the Company of $55,000,000 principal amount of its 7-1/2% Senior Notes due
2006 (the "Securities") pursuant to an Indenture, dated as of October 27, 1995
(the "Indenture"), between the Company and First Trust of California, National
Association, as trustee (the "Trustee"). We have examined the Registration
Statement on Form S-3, File No. 33-95832 (the "Shelf Registration Statement"),
of the Company and the Registration Statement on Form S-3, File No. 333-15143
((the "462(b) Registration Statement," and together with the Shelf Registration
Statement, the "Registration Statement")), filed with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), in connection with the public offering by
the Company of the Securities. The Securities are to be publicly offered and
sold by Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, J.P. Morgan & Co. and J.P. Morgan Securities Inc. (collectively,
the "Underwriters"). The Securities will be acquired by the Underwriters
pursuant to the terms of a Purchase Agreement (the "Purchase Agreement"),
dated October 31, 1996, between the Company and the Underwriters.
For the purposes of the opinions set forth below, we have
examined and are familiar with the proceedings taken and proposed to be taken
by the Company in connection with
<PAGE> 2
GIBSON, DUNN & CRUTCHER LLP
The Price REIT, Inc.
November 5, 1996
Page 2
the issuance and sale of the Securities. In arriving at the following
opinions, we have relied, among other things, upon our examination of such
corporate records of the Company and certificates of officers of the Company
and of public officials and such other documents as we have deemed
appropriate. In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such copies.
Based upon the foregoing examination and in reliance thereon,
and subject to the assumptions stated and relying on statements of fact
contained in the documents that we have examined and subject to the completion
of the proceedings to be taken by the Company, the Trustee and the Underwriters
prior to the sale of the Securities, it is our opinion that the Securities,
when executed, issued, delivered and paid for in accordance with the terms of
the Indenture and the Purchase Agreement (assuming due execution and delivery of
the Indenture and authentication of the Securities by the Trustee and payment
for the Securities by the Underwriters), will be binding obligations of the
Company.
Our opinion is subject to (i) the effect of applicable
bankruptcy, insolvency, reorganization, moratorium, arrangement and other laws
affecting creditor's rights, including, without limitation, the effect of
statutory or other laws regarding fraudulent conveyances, fraudulent transfers
and preferential transfers; (ii) the limitations imposed by general principles
of equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity); and (iii) our assumption that there exist no
agreements, understandings or negotiations among the parties to the Indenture
or to the Purchase Agreement that would modify the terms of either thereof or
the respective rights or obligations of the parties thereunder.
We render no opinion herein as to matters involving the laws of
any jurisdiction other than the laws of the United States of America and the
laws of the State of New York. In rendering this opinion, we assume no
obligation to revise or supplement this opinion should current laws, or the
interpretations thereof, be changed.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and we further consent to the use of our name under the
caption "Legal Matters" in the
<PAGE> 3
GIBSON, DUNN & CRUTCHER LLP
The Price REIT, Inc.
November 5, 1996
Page 3
Prospectus Supplement that forms a part of the Registration Statement. In
giving these consents, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Securities Act or
the rules and regulations promulgated by the Commission under the Securities
Act.
Very truly yours,
/s/ Gibson, Dunn & Crutcher LLP
------------------------------------
GIBSON, DUNN & CRUTCHER LLP
<PAGE> 1
EXHIBIT 8.1
[GIBSON, DUNN & CRUTCHER LETTERHEAD]
November 5, 1996
(213) 229-7000 C 72752-00011
The Price REIT, Inc.
145 South Fairfax Avenue
Fourth Floor
Los Angeles, California 90036
Re: The Price REIT, Inc.
Gentlemen:
We have acted as special counsel to The Price REIT, Inc., a Maryland
corporation (the "Company"), in connection with the issuance by the Company of
$55 million principal amount of 7-1/2% Senior Notes due 2006 (the "Notes") on
Form S-3 (Registration No. 33-95832), including a registration statement on
Form S-3 filed pursuant to Rule 462(b) (Registration No. 333-15143) under the
Securities Act of 1933, as amended (together, the "Registration Statement"),
which was declared effective by the Securities and Exchange Commission on
September 1, 1995.
You have requested our opinion concerning certain of the federal income
tax consequences to the Company. This opinion is based on various assumptions,
and is conditioned upon certain representations made by the Company as to
factual matters. In addition, this opinion is based upon the factual
representations of the Company concerning its business and properties as set
forth in the Registration Statement. We have made such legal and factual
examinations and inquiries, including an examination of originals or copies
certified or otherwise identified to our satisfaction of such documents, of
corporate records and other instruments as we have deemed necessary or
appropriate for purposes of this opinion.
We are opining herein as to the effect on the subject transaction only
of the federal income tax laws of the United States and we express no opinion
with respect to the applicability thereto, or the effect thereon, of other
federal laws, the laws of any other jurisdiction or as to any matters of
municipal law or the laws of any other local agencies within any state.
<PAGE> 2
The Price REIT, Inc.
November 5, 1996
Page 2
Based on such facts, assumptions and representations, it is our opinion
that:
(1) Commencing with the Company's taxable year ending December 31,
1991, the Company was organized in conformity with the requirements for
qualification as a real estate investment trust, and its proposed method of
operation has enabled and will enable it to meet the requirements for
qualification and taxation as a real estate investment trust under the Internal
Revenue Code of 1986, as amended (the "Code").
(2) The information in the Registration Statement under the caption
"Federal Income Tax Considerations," to the extent that it constitutes matters
of law, summaries of legal matters or legal conclusions, has been reviewed by us
and is accurate in all material respects.
This opinion is based on various statutory provisions, regulations
promulgated thereunder and interpretations thereof by the Internal Revenue
Service and the courts having jurisdiction over such matters, all of which are
subject to change either prospectively or retroactively. Also, any variation or
difference in the facts from those set forth in the Company's representations
may affect the conclusions stated herein. Moreover, the Company's qualification
and taxation as a real estate investment trust depends upon the Company's
ability to meet, through annual operating results, distribution levels and
diversity of stock ownership, the various qualification tests imposed under the
Code, the results of which will not be reviewed by Gibson, Dunn & Crutcher LLP.
Accordingly, no assurance can be given that the actual results of the Company's
operation for any one taxable year will satisfy such requirements.
We hereby consent to the use of our name and our opinion under the
heading "Legal Matters" in the Prospectus that forms a part of the Registration
Statement.
Very truly yours,
/s/ Gibson, Dunn & Crutcher LLP
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GIBSON, DUNN & CRUTCHER LLP
